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U.S. Lawmakers Call for Nationwide Investigation of Local Tax-Lien Programs

A dozen U.S. senators are calling on the federal government to investigate tax-lien programs across the country and find ways to thwart “unscrupulous practices” that in the District alone have cost dozens of families their homes.

September 20, 2013

A dozen U.S. senators are calling on the federal government to investigate tax-lien programs across the country and find ways to thwart “unscrupulous practices” that in the District alone have cost dozens of families their homes.

In a letter to the Justice Department, the lawmakers said vulnerable homeowners — the elderly, veterans and people with disabilities — should not lose their houses to companies that turn small tax debts into massive liabilities.

The senators said they were spurred by a Washington Post investigation that found that investors had bought thousands of tax liens throughout the District, then charged homeowners legal fees and other costs that far exceeded their original tax bills.

When homeowners were unable to pay, the investors took the properties through foreclosure — about 500 since 2005 — stripping families of their equity. One 95-year-old woman, Daisy Dolsey, lost a $300,000 house that had been in her family for half a century over a $44.79 tax debt.

Homeowners have been “put out on the street for a tax debt which initially amounted to less than a week’s worth of groceries or a month of cable television,” the senators wrote, citing Dolsey’s case. “While we understand that some state and local governments are struggling in the current economic climate, it is never acceptable to make up such a shortfall on the backs of some of our most vulnerable citizens.”

The push by lawmakers, led by Sen. Ron Wyden (D-Ore.), marks one of the first concerted efforts by federal leaders to intervene in an industry that has been run for decades by local governments, often with little scrutiny.